Intention U/S 415 IPC Is Key; Requires Thorough Investigation: Gujarat HC Refuses To Quash FIR For Offences Of Cheating, Misappropriation

It was alleged that the Accused had promised the Complainant that they would be making payment of goods within one month of the cloth being sold and on the basis of such promise, large value of the cloth was sold. The Accused had sold cloth to other persons, misappropriated the amount, cheated the Complainant and committed a breach of trust, it was alleged. Accordingly an FIR was filed with the Katadargam Police Station.

The Accused submitted that the Complainant and the Accused had business transactions since 2005 till 2010 worth 16 crores. However, the goods sent by the Complainant were sub-standard and defective and therefore, the payment was not made. Further, per Section 420, the law was settled that the intention of the Accused should be seen and so far no intention to cheat was made out. Insofar as Section 406 was concerned, the essential requirement is criminal breach of trust whereas here there was no entrustment basis which this offence could be committed. This was purely a civil transaction and the Complainant had unnecessarily given a criminal colour to the transaction.

Per contra, the Complainant contested that the defective goods would be replaced with a fresh lot of goods, yet the damaged goods were not returned to the Complainant. It was alleged that the intention to cheat was present from the inceptions of the transaction and the Accused had dishonestly misappropriated the property which had been entrusted to the them by the Complainant. It was further averred that the nature of transactions would not preclude the Complainant from filing an FIR for the offence.

The Bench comprising Justice Nikhil Kariel observed in this context,

"while the fact of the transaction between the parties being a commercial or a civil transaction appears to be a settled position, but at the same time it also requires to be mentioned that for the very same set of transactions the remedies to a party may occur in civil as well as in criminal proceedings and whereas even if civil remedy is availed by a party is not precluded from filing of proceedings in criminal law."

Reliance was placed on K. Jagadish Vs. Udaya Kumar G. S. and Another, (2020) 14 SCC 552 to bolster this view.

An important facet of the case according to the Bench was that the Complainant was ready to replace the defective goods. However, the accused stated that the goods may not be available in the same form.

"Meaning thereby that the goods have been utilized by the manufacturers to whom it had been sent by the petitioners," the Bench remarked.

Thus, the Bench was of the view that that there appears to be substance in the allegations made in the FIR that the applicants – accused having received the goods, had sold it to manufacturers/processing units and had misappropriated the sale consideration.

Reliance was placed on Rajesh Bajaj Vs. State NCT of Delhi and Ors, (1999) 3 SCC 259 where the Supreme Court had held in the context of Section 415:

"The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature of the transaction which would become decisive in discerning whether there was commission of offence or not."

Noting these precedents and the facts and circumstance, Justice Kariel concluded that at the stage of investigation, minute testing of the allegations raised in the FIR was required in order to determine if Section 415 was applicable. Hence, it would be incorrect for the High Court to interfere.

Accordingly, the applications were rejected.

Case Title: Amitbhai Harilal Ruparelia vs State Of Gujarat

Case No.: R/CR.MA/14333/2011

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